The much awaited hearing in the Senate Utilities, Energy and Communications Committee this morning was largely a dud, but it offered some key admissions by the utilities and energy regulators.
Despite widespread warnings to the contrary, in the report issued by energy regulators and So Cal Gas that was the subject of the hearing, there will be no blackouts this summer due to Aliso's closure.
Edison, the utility whose electric plants are fed by Aliso's gas lines, said very clearly this summer wouldn't be a problem. There's plenty of pipeline capacity and gas. Summer is, in fact, the low season for natural gas demand. Moreover, So Cal Gas and regulators added that Aliso would be available this summer in any case, should there need to be gas withdrawals.
So why did the regulators and utilties cry blackout in a scared state? Why are they instituting a PR campaign to call for cutting electricity demand? To scare the public into getting Aliso back on line by winter.
That nuance went right by Committee Chair Ben Hueso, who sounded like an advertisement for So Cal Gas and Aliso, whose parent company SEMPRA is big in his district. Bob Hertzberg reprised his 2001 role as "Bailout Bob," when as Assembly Speaker he worked with Wall Street on a legislative bailout of the utilities over big power bills being pushed on them by the likes of Enron.
In 2001, Hertzberg hired Credit Suisse to write the bailout, which never passed the Senate thanks in part to our Bailout Watchdogs at Consumer Watchdog and Senate Pro Tem John Burton. Back then, Credit Suisse stupidly posted on its website a memo advocating for raising the threat of blackouts, "the unthinkable," to cause legislative movement. Today Hertzberg brought back the same fear tactics over a systemwide "perfect storm" if So Cal Gas doesn't keep Aliso open.
Here's how the LA Times described the Hertzberg-Credit Suisse hubbub back in the day:
The same Wall Street firm that is advising Assembly Speaker Bob Hertzberg on solutions to the energy crisis stated on its Web site that the blackouts plaguing California are a tactic "likely intended to soften up the Legislature and the voters to the need for a rate increase."
Economists for Credit Suisse First Boston Corp., which has provided two financial experts to assist Hertzberg (D-Sherman Oaks) in drafting crisis legislation, stated in a recent commentary that the blackouts represent a threat of "the unthinkable" that politicians will almost always move to avoid.
They likened California's electricity woes to a moment in New York City's financial crisis a quarter of a century ago when the city could not make some welfare payments and meet police and fire payrolls.
"That prospect helped energize some legislative and banker concessions that got us over the hump," the commentary states. "The unthinkable rarely will be permitted to happen."
The big takeaway is that there's plenty of natural gas that can come through pipes. The problem isn't the available gas or the pipes to carry it, the issue is management of the gas, which is a people problem, not a resource problem. The utility and government witnesses said forcecasts for supply don't always meet demand, which is why they need Aliso.... Plan B, or Plan C, given there's plenty of other storage in the area, and pipeline receipt points to increase natural gas flow to the state from Mexico and Arizona.
Gas movements are planned the day before, so how hard is it really to order more gas on a hot day for the next hot day? Better than keeping a dangerous facility like Aliso open? Arizona and Nevada don't have any storage and they figure it out.
Engineer Bill Powers pointed out that there are new working assumptions already in play to balance the gas demand and supply in the wake of Aliso. Let's model those, not old assumptions. Anyone?
This was a tough audience of legislators who couldn't know or didn't care to. No independent experts like Powers were allowed to testify except to make public comment. But what is crystal clear is the blackout threat, widely reported, was just that, a threat, and not a realistic one based on today's testimony from the government and utility establishment. If Aliso's available for withdrawals, what's the problem?
The problem is they want to fill Aliso back up next winter and they had to resort to scare tactics to do it. That's why we need a public process through an Order Instituting an Investigation or OII, which the PUC instituted following the natural gas disaster at San Bruno and the failure of San Onofre. The San Bruno proceeding bought out the hundreds of thousands of emails showing corruption at PG&E and PUC and led to big fines. The PUC has been sitting on a request from Consumer Watchdog and Aguirre & Severson for an OII into Aliso for months. It seems the PUC doesn't want the type of dirt that came out in San Bruno to make the light of day.
This is a people problem too, not a natural gas problem. Time to shed some light on the people in goverment and utilities who are trying to sell us a bag of very expensive energy goods we don't really need.
